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Now is the time to pick up well-positioned semiconductor innovators after the hyperbolic valuation compression that this space has seen since 2022 began. I’ve uncovered one under-the-radar semiconductor play that stands to benefit from the next decade of digital development as staying connected from anywhere becomes a necessity rather than a luxury (which it was seen as just a decade ago).
MaxLinear (MXL - Free Report) , and its diverse portfolio of cutting-edge network-powering and connectivity-focused semiconductor products, are perfectly positioned for the commencing digital renaissance amid the post-pandemic Roaring 20s.
The world’s digital infrastructure is being rapidly built out as the burgeoning 5G revolution brings the world one step closer to ubiquitous high-speed mobile connectivity and positions MXL to continue its parabolic rally to the stars.
The pandemic forced the world economy to adapt (almost immediately in many cases) to an increasingly mobile work environment, which has made high-speed internet access and mobile connectivity an operational requirement for businesses and individuals alike.
MaxLinear has been a significant beneficiary of the pandemic’s expediated digitalization, with 2021 revenues more than doubling any prior fiscal year, pushing the company into robust profitability, while providing forward guidance that points to seemingly boundless demand for its innovative network connecting chips.
In the past 2-years of pandemic trading, MXL has managed to rally over 550% (despite its recent pullback) as Maxlinear’s savvy management team continues to execute on its operational growth objectives exceedingly well as analysts’ expectations get driven up every quarter.
Analysts continue to push up EPS estimates across all forecasted time horizons, driving MXL into a Zacks Rank #1 (Strong Buy).
The Business
MaxLinear is bringing the world closer together through its portfolio of low-band multi-gig connectivity chips (ultra-high-speed network connection over an extended range allowing more devices to connect simultaneously).
The enterprise’s one-of-a-kind single-chip wireless solutions are in high demand, which is only expected to grow as we enter the next phase of advancing civilization. The level of demand for MXL’s niche semiconductor products has surpassed supply, allowing it to flip the switch on profitability with expanding margins as it manages to control the pricing narrative in this highly inflationary environment.
According to MaxLinear’s corporate profile, “the company’s innovative solutions help shape the future of networking and communications technology. They drive 4G and 5G infrastructure; enable data center, metro and long-haul optical interconnects; bring 10Gbit to the home; power the IoT revolution; and enable robust and reliable communication for industrial and enterprise applications.”
The government-subsidized push to expedite the 5G rollout and ensure that every American is equipped with high-speed internet (outlined in the latest $1.2 trillion infrastructure bill signed by President Biden last November) coupled with significant private sector investments and demand should provide MXL with a longer-term tailwind than its cyclical nature might suggest (like many semiconductor companies).
MaxLinear has split its end-markets into two segments: wireless and wired infrastructure.
The company’s wireless infrastructure business includes 5G wireless access, wireless backhaul, and optical fronthaul, and MXL sees its serviceable available market (SAM) opportunity reaching $1.24 billion by 2023, representing a 45% increase from 2021.
MaxLinear’s wired infrastructure segment consists of data center fiber optics, last-mile access, and metro/long haul fiber. This fiber-fueled wired network division is expected to reach a SAM of just over $1 billion for MXL by the end of this year, representing roughly 7% annual growth in 2022.
The Valuation Advantage
Future-focused end-markets have propelled MXL into a rare profitable high-growth value play (due primarily to its under-the-radar profile). It continues to trade at a deep valuation discount to not only its own valuation history but remains materially cheaper (on a multiple-basis) than its lower-growth competitors.
MXL is trading at a forward P/E of less than 16x compared to the over 23x forward P/E that its closest competitors are valued at (in aggregate). MXL is rocking a PEG (growth adjusted forward P/E) of 0.8x compared to the 1.4x that its direct peer group currently resides at.
MaxLinear was a small-cap chipmaker going into the pandemic with a market value of around $1.5 billion and is coming out of this period of rapid digital adaptation with a $4.6 billion market cap, tripling its value in just 3 years.
Final Thoughts
MaxLinear’s managerial expertise can be seen in its financial statements with swelling free-cash-flows, quarterly reductions in long-term debt since the pandemic began ($0 current debt), and ballooning assets as the liability side of the balance sheet see sequential cuts.
5 of 7 covering analysts are calling MXL a buy today with soaring price targets which are now centering around the mid-$70s (25% upside on a conservative basis). After temporarily dipping below its 200-day MA MXL is breaking out and currently working on getting back above its 50-day, which it hasn’t breached since this year began.
Chips are poised to take off in the new normal. MXL is a well-positioned under-the-radar connectivity-focused addition to your semiconductor allocation, which should be an overweight sector as the new normal of boundless digital innovation takes effect (turning the chip space into a secular growth sector that you don’t want to miss out on).
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Bull Of The Day: MaxLinear (MXL)
Now is the time to pick up well-positioned semiconductor innovators after the hyperbolic valuation compression that this space has seen since 2022 began. I’ve uncovered one under-the-radar semiconductor play that stands to benefit from the next decade of digital development as staying connected from anywhere becomes a necessity rather than a luxury (which it was seen as just a decade ago).
MaxLinear (MXL - Free Report) , and its diverse portfolio of cutting-edge network-powering and connectivity-focused semiconductor products, are perfectly positioned for the commencing digital renaissance amid the post-pandemic Roaring 20s.
The world’s digital infrastructure is being rapidly built out as the burgeoning 5G revolution brings the world one step closer to ubiquitous high-speed mobile connectivity and positions MXL to continue its parabolic rally to the stars.
The pandemic forced the world economy to adapt (almost immediately in many cases) to an increasingly mobile work environment, which has made high-speed internet access and mobile connectivity an operational requirement for businesses and individuals alike.
MaxLinear has been a significant beneficiary of the pandemic’s expediated digitalization, with 2021 revenues more than doubling any prior fiscal year, pushing the company into robust profitability, while providing forward guidance that points to seemingly boundless demand for its innovative network connecting chips.
In the past 2-years of pandemic trading, MXL has managed to rally over 550% (despite its recent pullback) as Maxlinear’s savvy management team continues to execute on its operational growth objectives exceedingly well as analysts’ expectations get driven up every quarter.
Analysts continue to push up EPS estimates across all forecasted time horizons, driving MXL into a Zacks Rank #1 (Strong Buy).
The Business
MaxLinear is bringing the world closer together through its portfolio of low-band multi-gig connectivity chips (ultra-high-speed network connection over an extended range allowing more devices to connect simultaneously).
The enterprise’s one-of-a-kind single-chip wireless solutions are in high demand, which is only expected to grow as we enter the next phase of advancing civilization. The level of demand for MXL’s niche semiconductor products has surpassed supply, allowing it to flip the switch on profitability with expanding margins as it manages to control the pricing narrative in this highly inflationary environment.
According to MaxLinear’s corporate profile, “the company’s innovative solutions help shape the future of networking and communications technology. They drive 4G and 5G infrastructure; enable data center, metro and long-haul optical interconnects; bring 10Gbit to the home; power the IoT revolution; and enable robust and reliable communication for industrial and enterprise applications.”
The government-subsidized push to expedite the 5G rollout and ensure that every American is equipped with high-speed internet (outlined in the latest $1.2 trillion infrastructure bill signed by President Biden last November) coupled with significant private sector investments and demand should provide MXL with a longer-term tailwind than its cyclical nature might suggest (like many semiconductor companies).
MaxLinear has split its end-markets into two segments: wireless and wired infrastructure.
The company’s wireless infrastructure business includes 5G wireless access, wireless backhaul, and optical fronthaul, and MXL sees its serviceable available market (SAM) opportunity reaching $1.24 billion by 2023, representing a 45% increase from 2021.
MaxLinear’s wired infrastructure segment consists of data center fiber optics, last-mile access, and metro/long haul fiber. This fiber-fueled wired network division is expected to reach a SAM of just over $1 billion for MXL by the end of this year, representing roughly 7% annual growth in 2022.
The Valuation Advantage
Future-focused end-markets have propelled MXL into a rare profitable high-growth value play (due primarily to its under-the-radar profile). It continues to trade at a deep valuation discount to not only its own valuation history but remains materially cheaper (on a multiple-basis) than its lower-growth competitors.
MXL is trading at a forward P/E of less than 16x compared to the over 23x forward P/E that its closest competitors are valued at (in aggregate). MXL is rocking a PEG (growth adjusted forward P/E) of 0.8x compared to the 1.4x that its direct peer group currently resides at.
MaxLinear was a small-cap chipmaker going into the pandemic with a market value of around $1.5 billion and is coming out of this period of rapid digital adaptation with a $4.6 billion market cap, tripling its value in just 3 years.
Final Thoughts
MaxLinear’s managerial expertise can be seen in its financial statements with swelling free-cash-flows, quarterly reductions in long-term debt since the pandemic began ($0 current debt), and ballooning assets as the liability side of the balance sheet see sequential cuts.
5 of 7 covering analysts are calling MXL a buy today with soaring price targets which are now centering around the mid-$70s (25% upside on a conservative basis). After temporarily dipping below its 200-day MA MXL is breaking out and currently working on getting back above its 50-day, which it hasn’t breached since this year began.
Chips are poised to take off in the new normal. MXL is a well-positioned under-the-radar connectivity-focused addition to your semiconductor allocation, which should be an overweight sector as the new normal of boundless digital innovation takes effect (turning the chip space into a secular growth sector that you don’t want to miss out on).